Chicago | Reuters — Chicago Mercantile Exchange lean hog futures soared to contract highs on Monday on tightening U.S. supplies and rising cash prices.
Prices have been rallying as consumer demand is rising due to easing pandemic-induced restrictions on dining and travel, analysts said. Hog supplies are tight after some farmers euthanized hogs or performed abortions on pregnant sows last year as slaughterhouses closed during COVID-19 outbreaks among workers.
CME most-active June lean hogs ended up 2.925 cents at 112.65 cents/lb., and futures set new life-of-contract highs (all figures US$). The market remained strong after finishing up by the daily, exchange-imposed three-cent limit on Friday.
Cash prices were also firm, and the U.S. Department of Agriculture pork cutout value rose $1.20 for carcasses to $111.66/cwt.
The lack of available hogs has led to negative margins for pork processors. Packers were seeing a $18.50 loss per head on Monday, compared to a loss of $9.25 a week earlier, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC.
In the cattle market, futures were mixed as traders are expecting weakness in the cash prices, a broker said.
CME’s June live cattle futures fell 1.275 cents to 115.3 cents/lb., while August feeder cattle futures edged up 0.05 cents to close at 146.8 cents/lb.
Choice beef cutouts increased by $2.80/cwt, to $299.30, while select cuts rose 74 cents, to $283.79, the U.S. Department of Agriculture said.
Domestic and export demand for beef is strong, traders said. Beef packer margins jumped to $659.65 per head from $569.30 a week ago, according to HedgersEdge.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.